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AdTechGod Pod
The Refresh News: July 28 - Google’s AI Push, Newsweek’s Bold Pivot, and Paramount’s Merger Drama
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Last week a CEO lost their dignity, and this week we all lost cultural icons like Malcolm Jamal Werner from the Cosby Show, Ozzy Osbourne, jazz horn player Chuck Mangione, and Hulk Hogan. Geez. I'm Kate with Merchitecture and this is the Refresh, your weekly download on what went down in advertising. Today is Monday, July 28, and this week on the Refresh, we're covering Alphabet's Q2 earnings, Newsweek's monetization pivot and the Paramount Skydance merger approval. The biggest thank you to our sponsor Freewheel for their continued support these past couple of months. Now let's get into it. Kicking things off with Alphabet's Q2 earnings, which exceeded expectations, to say the least. Revenue jumped 14% year over year, hitting a record breaking $96.4 billion this quarter. Growth was fueled largely by its cloud and search businesses, with Google Cloud generating $13.6 billion, an impressive 32% increase from the same time last year. Meanwhile, ad sales climbed 10.4% to $71.3 billion. And despite whispers of Google Search crown slipping thanks to looming threats from ChatGPT and other generative AI based search platforms, search still grew almost 12% point in $54.2 billion in revenue for the quarter. YouTube also delivered a strong quarter, with advertising revenue up 13% to $9.8 billion. It's not just revenue that was up for YouTube. Nielsen's June numbers from the gauge show that YouTube captured nearly 13% of all US TV screen time, which is massive. But there have been some pressure points on the YouTube side of the biz. Despite passing 8 million subscribers, YouTube TV lost an estimated 500,000 subscribers in Q1 after a second price hike in less than two years. This serves as an important indicator of what consumers may be willing to tolerate or not when it comes to subscription costs for advertisers. Alphabet's earnings emphasized four key trends that are underlying the search ecosystem evolution. First, publisher referral traffic and revenues are under threat. Google's network division, which includes publishers and app developers that plug into their ad tech, saw revenue declines of about $100 million this quarter. They say correlation isn't causation, but that drop coincides with declining referral traffic to publishers, in all likelihood a byproduct of Google leaning harder into their AI overviews and the broader rollout of its generative search offering AI mode. Fewer clicks means fewer impressions for publishers and ultimately fewer opportunities to monetize their ad inventory. Second, Google is pulling users deeper into its own ecosystem. This quarter marked the first time that Google acknowledged that AI features like Overviews and Gemini are increasing query volume. Google CEO Sundar Pichai noted that AI overviews drive 10% more user queries from results that show them. He also highlighted that users, especially younger ones, are not just using search more often, but in new ways, which leads directly into our third trend. Consumer search behavior is diversifying. Multimodal search, which includes visual, voice and text based inputs, is growing fast. Features like Circle to Search and Google Lens are seeing increased traction and are often used alongside AI overviews, particularly among younger demographics. And finally, Google is beginning to explore monetization paths that benefit their need for more access to content and data and the need to compensate publishers. Last week, Trishla Oswal over at adweek reported that Google is considering content licensing deals similar to those that Perplexity and OpenAI have in place. It's also struck data licensing agreements with Reddit, Quora and Pinterest, giving a glimpse into a future where publisher monetization may depend less on traditional ad models and more on platform to platform partnerships. Big picture we're watching Google evolve from a traditional search engine into something more hybrid, a blend of SERP and AI chat interface designed to preserve the old while ushering in the new. Advertisers face both volatility and opportunity. As formats evolve, search behaviors shift to different platforms, and the economics of attention and brand discovery continue to be redefined. Next up, we've got a publisher pivot worth taking notes from. Newsweek is shaking up its business model in order to brace for the impact of AI on the open web, particularly search and its resulting referral traffic or increasing lack of Newsweek is anticipating this world where it may no longer be able to rely on organic traffic from search engines to drive impressions and therefore ad revenue. Right now, digital advertising still accounts for 63% of Newsweek's revenue, with the majority 70% coming from programmatic. But with referral traffic under threat, the publication is taking proactive steps to diversify its revenue streams. Their goal is to decrease dependency on advertising revenue to 55% this year. To accomplish this, Newsweek plans to maximize its acquisition of healthcare and pharmaceutical focused ad tech platform adprime, along with growing user subscriptions and monetizing its content through syndication deals with AI platforms to charge AI bots to crawl and train on its content. Think of it as a cost per crawl. Bot traffic to Newsweek's paywalled content jumped 732% between Q4 2024 and Q1 2025. They're currently monetizing this traffic through a partnership with Tolbit. Publishers like Newsweek are also beginning to rethink what type of inventory access they want to provide to advertisers or at least encourage them to buy. Many have started to shift focus away from open web programmatic and toward more direct relationships, including private marketplace deals and bespoke sponsorships. As generative search continues to push users toward using answer engines and engaging in zero click search behaviors, publishers are asking how to protect their IP and remain visible in AI driven environments. Meanwhile, advertisers are asking how to ensure discoverability and brand presence when links are buried under answer boxes or missing altogether. The rules are changing fast and everyone's trying to adapt to a playbook that's developing in real time. Maybe Newsweek CEO Dev Pragad put it, a big part of our diversification strategy is looking at revenue streams that could potentially be disrupted by AI, and then trying to invest and grow revenue streams that won't be. That's solid advice not just for publishers, but for every business that relies on discoverability, audience access, and the ability to drive revenue in a rapidly evolving Internet environment. Finally, one of the most controversial media mergers in recent memory is now official. The FCC has approved the Paramount Skydance deal, paving the way for the formation of Paramount Skydance Corp. The approval caps off more than a year of back and forth drama, legal battles and eyebrow raising settlements, specifically a $16 million payment to President Trump earlier this month, which many speculate was less about legal resolution and more about clearing the merger's path. Days after that settlement, CBS announced the cancellation of the Late show with Stephen Colbert, citing financial pressures. But critics argue the decision was politically motivated, especially given Colbert's outspokenness on the Trump settlement. The FCC's final blessing of the merger came after Skydance made assurances about promoting viewpoint diversity, vowing to steer clear of DEI focused programming and appointing an ombudsman to review complaints of bias or other concerns. The merger also represents a new family dynasty taking over this freshly formed media giant. David Ellison, son of Oracle founder Larry Ellison, will take the reins at Paramount. That makes it an especially big week for the Ellison clan. Oracle also struck a massive $30 billion per year deal with OpenAI for cloud and data center services. In other words, the Ellisons are now at the center of two of the most influential engines shaping media and AI's future. And just when we thought this saga couldn't get stranger or more dramatic, south park entered the chat. Paramount had just finalized a $1.5 billion deal with south park creators Trey Parker and Matt Stone Studio park county to stream the full south park on Paramount and crank out 50 new episodes for Comedy Central when, mere hours later, the show's season premiere aired, taking direct jabs at President Trump, the Paramount Skydance chaos and, well, let's just say a few highly contentious current events. Specifically one that starts with E and ends with Steen. South park is known for its political and cultural satire, but this episode definitely fell along the lines of it's funny cuz it's real. All that aside, I'll be interested to see if the drama dies down after the merger is finalized, or if Paramount's newly formed political obligations will plague them and advertisers as a result. That's all we have time for this week. Thanks for joining us for the refresh, and we'll catch you later.